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It doesn't look like anyone can stop the recent selling in Tesla, and Goldman Sachs doesn't seem interested in stopping that party. Ever since Elon Musk has been diverting his attention to Twitter, shares of Tesla have suffered. They are down about 10% in just the last 5 trading days and the company is trading near 52-week lows that are about 60% lower than the company's 52-week high of $402.64.
Shares of the automaker are down again about 1% in the Wednesday morning session - following a plunge of about 15% over the last month - after the investment bank downgraded the name on "softer supply and demand" worries.
Goldman Sachs analyst Mark Delaney also cut his price target on the company by nearly 25%, slashing expectations on the company to $235 per share from $305 per share. The target still marks a 46% increase from current levels, Bloomberg noted in a Wednesday morning wrap up.
The same report said that Delaney says "his reduced estimates are consistent with the added incentives and price reductions for certain Tesla vehicles this quarter, reduced wait times and soft macro indicators". We have noted many of these price plunges and factory slowdowns as they have played out over the last few months.
Despite this, Delaney still believes Tesla is "well-positioned for long-term growth".
The signs of a slowdown in demand have been presenting themselves. We have written recently about Tesla shuttering production at its key Shanghai plant, responsible for a majority of the company's overseas output. We noted days ago the company was planning on suspending production at the plant at the end of the year. Tesla, for the most part, has refuted that there are demand issues - but obviously the concern is starting to become real.
Model Y and Model 3 production lines are expected to be suspended in the last week of December, according to Bloomberg, citing people familiar with the matter. They said Model 3 production could resume in early January, though Model Y output disruptions could be prolonged. Another person said Model 3 production could be suspended again later in the month for the Chinese New Year. They added that this would allow for more upgrades and equipment maintenance to produce an enhanced version of the model.
In a separate report, Reuters cited two people with direct knowledge and an internal memo about the automaker's plan to suspend Model Y production at the plant between Dec. 25 and Jan. 1. The two people said the suspension of the assembly line would result in a 30% reduction in Model Y production for the month. They added this type of production halt isn't a common practice for the plant.
"The Shanghai factory, the most important manufacturing hub for Elon Musk's electric vehicle company, kept normal operations during the last week of December last year," Reuters said.
Earlier this week, Bloomberg said that slumping Chinese demand would result in the factory reducing production by 20% from full capacity. And almost immediately, a report from Shanghai Securities Journal called it "false information."
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